Building on previous implementation periods, in 2016 the final amendments of the Client Relationship Model – Phase 2 (CRM2) will come into effect. They require most registered firms to produce annual reports that give a clear picture of both their clients’ investment performance and charges in that period.
New reporting standards require information such as changes in the value of a client’s account and personal rates of return using a money-weighted method of calculation.
Investors will now receive detailed, standardized reports on certain fees charged to them, including an annual summary of charges and compensation earned by their advisor and/or dealer firms for operations and transactions.
One of the biggest impacts of CRM2 is the standardization of reporting on other types of compensation dealers and advisers may receive, such as trailer fees that are paid by third parties to your firm for ongoing services. This transparency will enable investors to better understand all aspects of an investment.
Developing strong relationships between dealers, advisers and investors is the goal of CRM2. Everyone is encouraged to learn more about the changes and how CRM2 will affect their investments, their outcomes and their professional relationships.